Air-rail cooperation: Partnership level, market structure and welfare implications

Abstract

We build a theoretical model to study different air-rail cooperation scenarios. We investigate two possible air-rail partnerships between a rail operator and either a domestic airline or a foreign airline. When a partnership is formed, an investment to improve the airrail connecting service is allowed at a cost before the service is launched. We find that the cooperation level, the equilibrium partnership scenarios when air-rail cooperation is exclusive or non-exclusive, as well as the comparisons of social welfare under different partnership scenarios, all depend on the pre-investment quality of air-rail service compared with the quality of air-air service. We further apply our model to the real-life case of Strasbourg-Paris-Dubai market, showing that other factors, such as price sensitivity of demand, horizontal differentiation between air and rail, and asymmetries in partnership investment costs, also affect cooperation level.

Accounting for the impact of variety-seeking: Theory and application to HSR-air intermodality in China

“…Among the research into HSR-air intermodality, most of the studies focus on estimating the impact of initiating HSR-air intermodality on, for example, environmental benefits, fares, traffic volume and welfare (Albalate et al, 2015;Dobruszkes and Givoni, 2013;Jiang and Zhang, 2014;Xia and Zhang, 2016;Zanin et al, 2012;Jiang et al, 2017). Other studies identify factors that affect the service level of HSR-air intermodality, such as travel time, travel price, ease of transfer, ease of access/egress, baggage handling system, ticket integration, service reliability, check-in and security-check procedures (Costa, 2012;Vespermann and Wald, 2011).…”

Determinants of airport train operational performance

“…Various solutions have been considered including baggage handling, schedule coordination, and compensation for delays, but the question of price was not addressed (Chiambaretto et al, 2013). Factors in cooperation also affect the sensitivity of demand to price, horizontal differentiation between air and rail, and asymmetry in the investment costs of partnerships (Jiang et al, 2017). Another study in Shanghai, China according to Chen and Lin (2016), needs to look at the relationship between the Airport Authority, the Shanghai Railway Bureau, and airlines by encouraging the integration of air trains through the improvement of shared ticketing and code sharing, direct baggage transfers, provision of fast and convenient connections and expansion of the link service area air train.…”

The emissions reduction potential of substituting short-haul flights with non-high-speed rail (NHSR): The case of Finland

“…In addition, a change of transport modes also bears the risk of missed connections in case of delays. One solution discussed in the literature to shift air passengers from short-haul flights to trains is air-rail integration (Jiang et al, 2017;Xia and Zhang, 2017). A modal shift from short-haul flights to NHSR could be made easier through a closer collaboration between Finnair and VR.…”